If you’re looking into investing in a rental property, how do you go about choosing what type of residence to buy? What brings the highest rental income? Are mortgages or insurance rates lower on one versus the others?
What makes a duplex better than a single-family home in terms of property investment values? A major factor is, of course, is cost of property. In many US cities, including Aurora and Denver, a duplex can be purchased for prices very comparable to those of single-family home or condominium. Keeping in mind, prices for multiplex properties are generally higher, but it means more units which means more income to cover those higher mortgage payments.
Compared to a single family home, the duplex or multiplex can help with one real issue a rental owner may encounter: covering the mortgage in times of rental vacancy. When the single-family home is vacant, one month to several months, the investor must still cover the mortgage payment, which would usually be completely or partially paid by the tenant’s monthly rent. With a duplex or multiplex property, some of the mortgage payment will be offset each month from rents, unless all units go vacant simultaneously. And, when all units are rented out, the property will most likely show a positive income after the mortgage payment each month.
Now, when it comes to the maintenance of a single-family home versus a duplex or multiplex, an investor may choose less units is less maintenance. Not too mention, property insurance rates for a single-family home is about 15% to 25% lower than the insurance for a duplex or multiplex.
When it does come time to sell your investment, reselling a duplex may take longer, because there is generally less market demand for duplexes than for single-family homes.
So, in the long run, the decision if up to you, as the investor, but when you do buy your next rental investment property make sure to use the best in Property Management. Make the choice of Legacy Properties-PM in Denver, and serving all of the surrounding areas including, but not limited to, Aurora, Centennial, Highlands Ranch, Littleton, & Parker. Call 720.989.1996 or contact us.